NBCUniversal bolsters Telemundo as US Latino market grows

Telemundo has long been like a remote Caribbean island, cut off from its sprawling media homeland.

NBCUniversal acquired the Spanish-language television network a decade ago for $2 billion but became discouraged by its seemingly limited prospects. But Comcast Corp.'s takeover of NBCUniversal last year may be building Telemundo a bridge to the mainland.

"Telemundo now has the full support of Comcast and NBCUniversal," said Emilio Romano, a former Mexican airline chief executive who was hired a year ago to run Telemundo. "For them, Telemundo is clearly a diamond in the rough."

The Miami-based network, which began in 1954 as a single Puerto Rico TV station, had long been viewed as an "East Coast" outlet infused with Caribbean flavor - not the right ingredients for the majority of U.S. Latinos, two-thirds of whom are from Mexico or are of Mexican descent.

Appealing to viewers with Central American heritage has become central to NBCUniversal's campaign to grow Telemundo. But there's a hitch: Telemundo's rival, Univision Communications, has a lock on Mexico's top-rated prime-time soap operas, plus contracts with top Mexican actors and the rights to some of the most popular Mexican soccer teams - making Univision the network of choice for most Mexican immigrants.

So Telemundo has had to shell out tens of millions of dollars to produce original programming to compete in the increasingly crowded field of Spanish-language television.

"They are a hungry No. 2," said Carmen Baez, president of Latin America operations for advertising behemoth Omnicom Group. "It's like that old Avis rental-car slogan: 'We try harder.'"

Since Comcast took majority control of NBCUniversal in January 2011, it has installed new management at Telemundo and increased the operating budget. Last year Comcast agreed to spend about $600 million for the rights to broadcast the FIFA World Cup soccer tournaments in 2015 through 2022 - nearly double the amount that Univision currently pays.

The company increased Telemundo's annual programming budget nearly 20 percent and steered more resources to local Telemundo stations, including KVEA-TV Channel 52 in Los Angeles - the nation's largest Spanish-language media market. KVEA has spent several million dollars improving its equipment, strengthening its broadcast antenna and converting to a high-definition signal. Last year it added a morning newscast, "Buenos Dias L.A.," and this year a Sunday local affairs program, "Enfoque Los Angeles."

"It's a 360-degree programming strategy built around cultural relevance," said Lauren Zalaznick, who oversees Telemundo as NBCUniversal's chairman of entertainment and digital networks.

For example, because many Latino families watch television together, Telemundo licensed films from Walt Disney Co.'s Pixar Animation Studios, creator of such blockbusters as "Toy Story" and "Cars," to build a Sunday night movie block. Telemundo has slowly bolstered its daytime schedule, sending its TV judge, Ana Maria Polo - who has been dubbed the "Latino Judge Judy" - on a road trip to Los Angeles and broadcasting more news from Mexico.

The company also has paid more attention to Mun2, its bilingual youth-oriented cable channel with a strong presence in L.A. This week the channel was dealt a devastating blow with the unexpected death of its reality show superstar, Jenni Rivera, in a plane crash in northern Mexico.

Telemundo draws an average of 1.2 million viewers in prime time, an increase of 5 percent over 2011 and 18 percent more than in 2010, according to ratings firm Nielsen. Univision's ratings have held steady but its second broadcast network, TeleFutura, is down 5 percent this year.

"Telemundo is a high-growth asset," Zalaznick said. "When we looked at the Hispanic American audience, we found that immigration growth in the U.S. had slowed considerably. We realized that we were looking at an existing pie, and if we wanted to grow, then we were going to have to take share away from our competitors."

The company's strategy is starting to pay off, said Lia Silkworth, co-managing director of the ad firm Tapestry, which specializes in Latin media.

"They are making a cognizant effort to be more balanced in who they put on camera - their music celebrities, actor choices and the story lines. It's a matter of being relevant to the largest possible audience," Silkworth said. "They are trying to be true to their audience, and having the audience see themselves in what they see depicted on the TV screen."

Silkworth and Omnicom's Baez said Telemundo stands out for advertisers because it develops its own dramas and produces them in the U.S. instead of importing them from Mexico. Marketers are able to insert their brands and products into the story lines, a practice called "product placement." For example, in the show "Corazon Valiente," a character's wife becomes jealous when he receives a phone call from another woman. But the man explains the caller is their State Farm insurance agent.

Consulting firm SNL Kagan estimated that Telemundo will generate about $340 million in revenue this year, an increase of 6.5 percent over 2011. The firm expects operating income to reach $62 million, an increase of 8.4 percent.

NBCUniversal's campaign to bolster Telemundo comes as other major media companies join the race to reach the estimated 50 million Latinos living in the U.S. Disney's ABC, Rupert Murdoch's News Corp. and Time Warner Inc.'s CNN have been gearing up new TV programming services to target Latinos.

Integrating Telemundo's operations within NBC long has been a challenge, but observers say they are seeing greater signs of cooperation. For example, Telemundo set up its operations near the NBC News anchor desk at Rockefeller Center in New York last month for its election night coverage. The network saw 30 percent higher audience turnout than in 2008.

Next year Telemundo plans to introduce a children's version of NBC's "The Voice," called "La Voz: Ninos."

The network also has been beefing up its sports coverage. Although Telemundo's experiment to broadcast an NFL football game on Thanksgiving night was a turkey, last summer the network aired more than 170 hours of coverage from the London Olympics - a 20 percent increase compared with the 2008 Beijing Olympics - which produced strong ratings, particularly for soccer.

"You cannot underestimate the power of a strategic focus," Zalaznick said. "Our programming will resonate if it incorporates family values and themes such as testing of one's soul by pursuing the American dream, and achieving a better legacy for your kids than the one that you inherited."

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